Edsel counter-intuitive behaviour: a summary

Total Edsel sales were approximately 116,000, less than half the company's projected break-even
point.

Intuitive symbols of innovation are everywhere, such as the ubiquitous corporate wall of
patents or a product hall of fame. Likewise, we often associate innovation with the image of
Rodins The Thinker, which could symbolize the innovator deep in thought, ready to thrust
upon the world a great new idea. The leveraging of failure leads to symbols of innovation
that are counter-intuitive, such as an Edsel parked in front of Ford Motor Companys
headquarters.

The Edsel was an automobile marque that was planned, developed, and manufactured by
the Ford Motor Company during the 1958, 1959, and 1960 model years. With the Edsel,
Ford had expected to make significant inroads into the market share of both General Motors
and Chrysler and close the gap between itself and GM in the domestic American
automotive market. But contrary to Ford's internal plans and projections, the Edsel never
gained popularity with contemporary American car buyers and sold poorly. The Ford Motor
Company lost millions of dollars on the Edsel's development, manufacturing and marketing.
The very word "Edsel" became a popular symbol for failure.

Ford later claimed to have performed more than adequate, if not superior, product
development and market research work in the planning and design of the new vehicle.
Particularly Ford assured its investors, and the Detroit automotive press, that the Edsel was
not only a superior product (as compared to its Oldsmobile/Buick competition), but the
details of its styling and specifications were the result of a sophisticated market analysis and
research and development effort that would essentially guarantee its broad acceptance by
the buying public when the car was introduced.

Counter intuitive behaviour is exemplified in 2 ways here: One, Fords market strategy,
design and manufacturing failures, and two, how the name Edsel was associated with Ford
and how it failed to live up to his ideals. Eventually, the brand Edsel bore almost no
resemblance at all to the man.

On Edsel Ford the person: Henry Fords son. Handled business side of the company while
father took care of engineering and innovation. Successful though he was as an executive,
Edsel's real contribution was not in the daily routine of making and selling. He brought
something new to the automobile industrya belief that an automobile could be
beautiful as well as useful. His principal interest was in the styling of cars to carry
out this ideal.
Design controversies
The Edsel's most memorable design feature was its trademark "horsecollar" or toilet seat
grille, which was quite distinct from other cars of the period. According to a popular joke at
the time, the Edsel "resembled an Oldsmobile sucking a lemon". (directly counter intuitive to
Edsels vision)
Edsel Fords Important Marketing Insights (and how Edsel th
e brand failed mainly because of poor marketing)
It was Edsel who recognized that there was a large field of prospects among the middle
class, for whom pride, vanity, a desire for something more impressive enter very strongly
into the sale." His ability to recognize the public's inherent desire to purchase "something
more impressive" motivated his push for a medium-priced car. As a result of his efforts, the
Lincoln-Zephyr was added to the Lincoln line in 1935.
He further recognized that the lower area of the medium-price market, the area which would
benefit most by the shift to higher-priced cars, was untapped by Ford Motor Company. The
competitive potential of the company could not be maintained without active entry into this
price class and, accordingly, the Mercury was launched in October 1938.
Market research failure
"The aim was right, but the target moved"

The Edsel is most notorious for being a marketing disaster. Indeed, the name "Edsel"
became synonymous with the "real-life" commercial failure of the predicted "perfect" product
or product idea. Similar ill-fated products have often been colloquially referred to as
"Edsels". The public had difficulty understanding what the Edsel was, primarily because
Ford made the mistake of pricing the Edsel within Mercurys market price segment.
Theoretically, the Edsel was conceived to fit into Fords marketing plans as the brand
slotted in between Ford and Mercury

Although the Edsel was supposed to be advertised, and otherwise promoted, strictly on the
basis of preferences expressed in polls, some old-fashioned snake-oil selling methods,
intuitive rather than scientific, crept in.

(paste FOB Ford Price Structure into ppt) Fords Strategic Business Units during 1950s

Not only was the Edsel competing against its own sister divisions, but model for model,
buyers did not understand what the car was supposed to bea step above the Mercury, or
a step below it.
The wrong car at the wrong time

One of the external forces working against the Edsel was the onset of an economic
recession in late 1957.
Compounding Edsel's problems was the fact that the car had to compete with well-
established nameplates from the Big Three, such as Pontiac, Oldsmobile, Buick, Dodge and
DeSoto, as well as with its own internal sister division Mercury, which itself had never been
a stellar sales success. To make matters still worse, as a new make, Edsel had no
established brand loyalty with buyers, as its competing makes had.

Edsel, a Difficult Name to Place
Reliability
Even though the Edsel shared its basic technology with other Ford products, a number of
issues caused reliability problems, mostly with the 1958 models. Reports of mechanical
flaws with the cars surfaced, due primarily to lack of quality control and confusion of parts
with other Ford models. It certainly didn't help that the first Edsels were reportedly delivered
with oil leaks, sticking hoods, trunks that wouldn't open, and push buttons that couldn't be
budged with a hammer.

The End

Whiz Kid Robert McNamara moved to reduce Edsels advertising budget for 1959, and for
1960, he virtually eliminated it. The final blow came in the fall of 1959, when McNamara
convinced Henry Ford II and the rest of Ford's management that the Edsel was doomed
and that it was time to end production before Edsel bled the company dry.

Executive Failure:
Don't put yourself in a situation you can't get out of.
A year before launch, Ford began a teaser campaign for the E-Car, the code name for the
Edsel as it was being developed. It gave customers the expectation that they were going to
get an irresistible car of the future.
Ford execs seemed to never once consider failure to be an option. They created an entire
Edsel division and persuaded dealerships to order a certain number of cars before the
Edsel was even finished.
Had they acted more cautiously and avoiding betting so much on the car, they could have
pulled back once the stock market took a nose dive in the summer of 1957 and people
stopped buying mid-priced cars. Mere weeks before the car's launch in September, Brooks
writes, "Automotive News reported that dealers in all makes were ending their season with
the second-largest number of unsold cars in history."

2,000 different names gathered, final 10 reviewed by execs
None of these names aroused any enthusiasm
The name Edsel is chosen

Fords Strategic Business Units during 1950s





Edsel's marketing department promised to sell 200,000 cars the first year. Actually, they
sold 63,110. And it got worse. Sales dropped below 45,000 the second year. And only
2,846 of the 1960 models sold before Ford stopped production.
To Angus MacKenzie, editor of Motor Trend magazine, there's a lesson in the Edsel
disaster: "Market research has never created a great car," he says. "Great cars are the
product of passion."

Bad Timing
Although extensive market research had been performed, ultimately the Edsel
failed because of dated nature of the research. The feasibility and marketability of the
automobile was based too much so on historical data, dating back ten years. Ford failed to
foresee the market conditions at the time of release and produced a car that may have
succeeded five years prior.

Chapter 2
http://www.valuewalk.com/wp-content/uploads/2014/07/Business-Adventures_-Twelve-
John-Brooks-1.pdf

Ford Edsel: Marketing Mistake Case Study
http://genevagraduate.com/teddyk/powerpoint-presentations/fordedse/
The Edsel Timeline
http://www.edsel.com/pages/timeline.htm

http://en.wikipedia.org/wiki/American_automobile_industry_in_the_1950s

Why This Historic Ford Flop Is One Of Bill Gates' Favorite Case Studies

http://www.businessinsider.in/Why-This-Historic-Ford-Flop-Is-One-Of-Bill-Gates-Favorite-
Case-Studies/articleshow/38937325.cms
Classic brand failures: The Ford Edsel
http://brandfailures.blogspot.in/2006/11/ford-edsel.html

Important points:
1940-50s trend toward medium-priced cars was growing
Pontiac, Oldsmobile, Buick, Dodge, DeSoto, & Mercury represented 1/3 of car sales, mid
1950s
$50 Million Advertising Budget
Marketing was geared towards a fast masculine car.
Over the first 10 days of Oct. only 2,751 cars sold. Average of around 300 cars a day
In order to hit 200,000 target in year 1, roughly 650 needed sold each day
November 1958 new Edsel was shorter, lighter, & less powerful
Dealerships were underfinanced
Separate division was expensive, raised breakeven points